reporting settlement of otc coprorate bonds …
TRANSCRIPT
1/8PPT Courtesy NSECopyright © 2012 National Stock Exchange of India Ltd.
REPORTING &
SETTLEMENT OF OTC COPRORATE BONDS TRANSACTIONS UNDER
DVP 1 SYSTEM through
Clearing Corporation of Exchanges
3/8PPT Courtesy NSE
OTC Transactions in
Corporate Bonds
Corporate Bond REPOS
Commercial Paper (CP)
Certificate of Deposit (CD)
4/8PPT Courtesy NSE
Trade Reporting
Along with reporting a trade, settlement attributes also reported
Venue of settlement
Terms of trade T0 T1 or T2
Total consideration
Custodian settlement
Information passed on by the reporting platform to venue of settlement intra day.
5/8PPT Courtesy NSE
F-TRAC F-TRAC
Registered SellerRegistered Buyer
Deal Struck
Buyer –seller
All Fields MATCHED
Buyer –seller All
Fields NOTMATCHED
F-TRAC
Unmatched Deals
Clearing Corporation of
ExchangesFor Settlement
Unmatched Deals need to be modified & matched OR cancelled and deleted from F-TRAC by mutual agreement
OTC Deals Strike & Reporting
6/8PPT Courtesy NSE
Exch. 1
BUYER
CLEARING CORPORATIONs
(CCs)
UNDER EXCEPTIONAL CIRCUMSTANCES ONLYOTC Deals & Settlement Between FTRAC member & Non-member & Reported on
different Platforms
DEPOSIROTY
FUNDS
SELLER
F-TRAC
CC 1
CC 2
REPORTING PLATFORMS
(RPs)
Settlement House
Settlement House
BANKMutual Fund
Bond Pay-in
Funds
Instruction
Bond Pay Out
( Preferable that both parties are members of same RPs and CCs )
Exch. 2
7/8PPT Courtesy NSE
Reporting & Settlement Process for OTC Deals Between FTRAC member & Non-member reported on different Platforms
1) OTC deal done over the phone or through broker
2) Reporting by Seller to BSE’s platform
2A) Reporting by Buyer to F-TRAC platform
3) Information flow regarding seller, buyer, bond & consideration particulars from Exch. 1 to Clg. Corp. 1
3A) instruction from clearing Corporation (Clg. Corp. 1) to Buyer to arrange funds to Clearing Corporations Pooling A/c with RBI
4) Instruction from seller to Depository to transfer bonds to Pooling A/c of Clearing Corporation
8/8PPT Courtesy NSE
Cont..
4A) Funds Pay-in : RTGS transfer of funds from Buyer to Clearing Corporation pooling A/c at RBI
5) Bonds Pay-in by Sellers Depository to Clearing Corporation Pooling A/c
6) Bonds Pay-out form Clearing Corporation pooling A/c to Depository A/c of Buyer
6A) funds pay-out from Clearing Corporation’s Pooling A/c at RBI to Seller’s A/c at RBI through RTGS
9/8PPT Courtesy NSE
Settlement
Securities (Bonds CP CD) settled in depositories
Existing demat account of participants
Funds settled through RBI RTGS
Participants who have RBI RTGS account
– Buyers transfer funds to Settlement account
– Sellers receive funds from Settlement account
Participants who do not have RBI RTGS account
– Buyers avail their bankers facility to transfer funds to settlement account
– Sellers receive funds through bankers RTGS facility
10/8PPT Courtesy NSE
Registered BuyerRegistered Seller
Initiates RTGS
Transfer Funds
CC RTGS A/C
CC B/O A/C
Funds Pay-InFunds Pay-Out
Transfer Slip to DP
Transfer Bonds Transfer Bonds
Settlement Notification
Bonds Pay-In Bonds Pay-Out
Transfer Funds
a. Process Funds Receivedb. Process Bonds Receivedc. Sends notification to buyerd. Sends Notification to Sellere. Follow Upf. Executes Settlements &
Payouts
Settlement Notification
Matching payin with obligation
DVP 1 Settlement (Normal)
11/8PPT Courtesy NSE
Registered BuyerRegistered Seller
Initiates RTGS
Transfer Funds
CC RTGS A/C
CC B/O A/C
Funds Pay-InFunds Pay-Out
Transfer Slip to DP
Transfer Bonds
Return of Bonds
Bonds Pay-In Bonds Pay-Out
Transfer Funds
a. Process Funds Receivedb. Process Bonds Receivedc. Sends notification to buyerd. Sends Notification to Sellere. Follow Upf. Executes Settlements &
Payouts
Settlement Notification
Matching payin with obligation
Failed Trades (Funds not Received from Buyer) Bonds returned to Seller if Seller delivers bonds
X
XXX
X
X
Settlement Notification
X
X
Failed Trades appear on NSE & BSE Websites
12/8PPT Courtesy NSE
Registered BuyerRegistered Seller
Initiates RTGS
Transfer Funds
CC RTGS A/C
CC B/O A/C
Funds Pay-InFunds Pay-Out
Transfer Slip to DP
Transfer Bonds
Settlement Notification
Bonds Pay-In Bonds Pay-Out
Transfer Funds
a. Process Funds Receivedb. Process Bonds Receivedc. Sends notification to buyerd. Sends Notification to Sellere. Follow Upf. Executes Settlements &
Payouts
Settlement Notification
Matching payin with obligation
Failed Trades (Bonds not received from seller)Funds returned to buyer if buyer transfers funds
X
X
X X
X
X
Funds Returned
X
X
Failed Trades appear on NSE & BSE Websites